WASHINGTON -- With Congress considering a tax cut
package that could exceed $70 billion and the Treasury Secretary again being
forced to take extraordinary measures to avoid breaching the $8.18 trillion
statutory debt limit, The Concord Coalition said today that Congress should act
promptly to approve an increase in the statutory debt limit accompanied by
budget enforcement mechanisms to limit further increases in the debt. Concord
recommended that any legislation providing a large-scale increase in the debt
limit also include provisions reinstating pay-as-you-go rules for all
legislation that would increase the deficit.

“It is clear that the debt limit must be increased. Failure
to approve an increase would have dire consequences for government finances and
financial markets. Delaying action on an increase until the last possible
moment, forcing Treasury to utilize extraordinary measures to avoid a default,
is unnecessary and irresponsible. However, under the current fiscal
circumstances approving a large-scale increase in the debt limit without a plan
to restore fiscal discipline would also be irresponsible,” said Robert Bixby,
Executive Director of The Concord Coalition.

“Congress should pass a short-term increase in the debt
limit to address the immediate crisis and begin work on measures to restore
fiscal discipline to accompany a large scale increase in the debt limit. Such a
plan should at a minimum provide for reinstating pay-as-you-go rules for all tax
and spending legislation. The rationale for this
trade-off is clear: greater flexibility to increase the debt is allowed, but
only within the context of a fiscally responsible budgetary framework.,”
Bixby said.

Despite warnings by Treasury Department officials
that the government was on the brink of reaching the debt limit and the need for
additional funds to support troops in Iraq and Afghanistan, Congressional action
last week focused on going forward with tax cuts legislation which would add
another $70 billion to the debt.

“Instead of working on another round of debt-financed tax
cuts, Congress should own up to the consequences of tax and spending policies
which have resulted in deficits by having a full debate and vote on an increase
in the debt limit,” said Ed Lorenzen, Policy Director of The Concord Coalition.
“If Congress wants to avoid regular votes on increasing the debt limit, the
remedy is to reconsider the fiscal policies which have made repeated increases
in the debt limit necessary.”

The Concord Coalition is a nonpartisan, grass roots
organization dedicated to balanced federal budgets and generationally
responsible fiscal policy. Former U.S. Senators Warren Rudman (R-NH) and Bob
Kerrey (D-NE) serve as Concord's co-chairs and former Secretary of Commerce
Peter Peterson serves as president.